Data-Privacy Regulations: Marketing Symptom, Setback and Solution

Ethics hardly seems to be a priority among businesses today. And as executive teams increasingly charge marketing departments with driving revenue, it’s easy to see how marketers lose sight of the big picture: what’s good for customers is good for business. The rise of data-privacy regulations is evidence of this.

The EU’s General Data Protection Regulation (GDPR) went into effect in May of this year, and California’s Consumer Privacy Act goes into effect in January 2020. As Jeff Nicholson recently wrote, California’s data-privacy regulation “may start a domino effect on the way US companies collect, store and use personal data.”

Such laws, the result of unethical business practices, cause major headaches for marketing teams. Yet they also present the best solution to growing problems affecting our customers and companies.

Marketing’s Data Dependence

To be clear, I’m not arguing that marketing as a discipline or marketing organizations are intrinsically unethical. However, I would argue that certain marketing processes — namely our obsession with acquiring prospect/customer data — have many unintended, negative consequences on both our target audiences as well as the market economy with which our businesses rise and fall.

We, as marketers, are often unaware of how secure (or insecure) data is when we capture, transfer or use it. As it turns out, it’s often not at all secure. Earlier this year, hackers gained access to information on 150 million users of Under Armour’s MyFitnessPal app. And earlier this month, Marriott announced a massive data breach, potentially affecting 500 million people. Consequently, identity-theft is estimated to cost American consumers alone more than $16 billion annually.

The situation is bad for our organizations as well. As target audiences lose faith in our ability to safeguard their interest, they’re far less likely to interact with our marketing engagement efforts, much less do business with our companies.

Regulations: A Symptom of Unethical Marketing and Data Insecurity

A May, 2018 article in the Economist succinctly corroborated the link between marketing practices and data privacy laws, stating the GDPR was the result of marketers’ (via their advertising tech) “insatiable hunger for personal data.”

Businesses across the globe have largely failed to self-regulate. And in marketing’s pursuit to acquire as much data as we can, as quickly as we can get it, we’ve put our prospects and customers at risk. It’s for reasons such as these that government-implemented data-protection regulations are on the rise.

Regulations: A Roadblock to Marketing Efficacy

Data-privacy regulations like the GDPR make it more difficult for marketers to do their job — no surprises there. Think about all the database contacts you lost after being required by the GDPR to ensure your EU audiences had recently opted into communications from your company. Or the work that went into updating landing page language to ensure prospects provide consent for lead capture. Or how your team had to adjust data-transfer processes to ensure secure, compliant data transfer.

And that’s assuming you’re still marketing to EU audiences. Many marketing organizations have simply stopped, greatly diminishing the size of their total addressable market (TAM), which obviously affects their ability to scale demand.

Regulations: The Best Solution

Like all regulations, data-privacy rules can hurt efficiency and innovation, and therefore impede productivity. However, as the threats of unethical practices proliferate, the benefits of regulations are growing relative to their costs — for both consumers and businesses.

Facebook has been embroiled with the Cambridge Analytica scandal for nearly a year now, which has significantly deflated its share prices. And though regulations can stifle innovation, it’s easy to see how innovation is equally hurt if consumers and prospects lose faith in the ability of businesses to self-regulate. Customers and prospects are far less likely to support new, untested products if companies can’t ensure the security of data. Regulations seem to be the best solution.

The idea of data-privacy regulations as necessary is even being supported by leading tech companies. Apple’s CEO, Tim Cook, has called privacy a “human right.” And Facebook’s Mark Zuckerberg has expressed his openness to regulation.

How Ethical Marketing Practices and Regulations Can Benefit Marketing Performance

Though the increasing number of regulations may seem like a “lesser of two evils” situation, there is a silver lining: smart marketers are using compliance to gain market share over the competition. Here’s some of the ways regulations and trust-based, ethical marketing practices can benefit your organization:

New data-privacy regulations don’t impede ABM as much as lead-based marketing

Account-based marketing(ABM) requires marketers to focus their efforts, resources and budget on fewer accounts and individuals. It shuns spray-and-pray email tactics and high-volume lead gen goals — both of which require marketers to scrape as much personal data as possible and are averse to data privacy.

Data regulations and good ABM strategies strive to create quality prospect interactions by being customer-focused. This demands that marketers be respectful of prospect data and gain trust.

Regulations will force businesses to focus on the metrics that matter

Sure, the executive team understands that pipeline opportunities and revenue are more important than lead volume. Yet, for most marketing teams, as soon as top-funnel lead volume decreases (a common result of ABM implementation), the C-suite is quick to question demand strategy.

Recent and upcoming data-privacy regulations provide good arguments for marketing teams to shift goals down funnel. In turn, this will enable them to prioritize efforts and resources to practices that best result in pipeline and revenue growth.

Prospect data quality will improve

The fact that the GDPR requires consent for specific uses of data will lead to an improved understanding of prospect needs. In other words, marketers will gain more specific, accurate prospect data with which they can further qualify, nurture and convert leads into opportunities.

Program transparency will also improve

Regulations certainly create barriers to marketing-funnel entry. But this is a good thing. This barrier acts as a filtration device, limiting the amount of bad data that can muddy your database and skew your program measurement, analysis and optimization. With a cleaner database, you’ll gain a better understanding of which engagement tactics are resonating with your target audiences.

Increased marketing team efficiency

When prospect data is of higher quality, your team doesn’t need to waste as many resources trying to convert leads that should never have been in your database to begin with. You can reallocate time and effort to more strategic, revenue-driving activities.

Marketing’s credibility will surge among other teams

When marketing’s engagement efforts become more personalized — both due to compliance requirements and because you’ll have more specific information about prospects from the beginning — prospective customers will be more open to engagement. The result is a much smoother, more productive lead hand-off to sales. Plus, as marketing resources are freed from chasing down and managing a database bloated with uninterested contacts, you’ll be able to better assist sales with down-funnel enablement efforts.

About the Author

David Crane joined Integrate in September of 2011. An ardent student of marketing technology, David leads thought leadership efforts at Integrate while also helping the sales and marketing teams communicate solutions to customer-specific marketing challenges.

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